Making College More Affordable With The Right Loan
Federal Perkins Student Loans are low interest government student loans made through a participating school to undergraduate and graduate college students with substantial financial need. In order to qualify for a Perkins college student loan, a college student’s Expected Family Contribution (EFC), determined by the government’s FAFSA (Free Application for Federal Student Aid) will have to demonstrate the greatest level of financial need. Recipients of Federal Pell Grants will receive priority for Perkins Student Loans.
When applying for federal financial aid, it is important to note that the participating school will distribute the Perkins Student Loan on behalf of the government and when the funds are gone, they are gone. What this means is even if you do qualify for a Perkins Student Loan you may not actually get one. Therefore, with interest rates steady at 5%, it will be in your best interest to submit your FAFSA on January 1 or as humanly possible to that date. This can ensure that you get the maximum amount of Perkins Student Loan funds you have qualified for.
The maximum amount for a Federal Perkins Student Loan made to an undergraduate student is $4000 per year and up to a total of $20,000 over the course of an undergraduate program. For graduate college students, the maximums are higher, at $6,000 per year and $40,000 over the course of your graduate studies.
The federal government will subsidize all Perkins Student Loans. Therefore, while you are in school, and while the student loan is in any type of deferment period, the federal government will pick up the tab for all the interest. This can actually save you thousands of dollars in interest when you do eventually have to repay your student loan. I have an example below:
Let’s say an undergraduate college student is able to take the maximum Perkins Student Loan amount of $4,000 each year at 5% interest. The government is going to pay the student’s interest on the first student loan for over 4 years (4 school years plus a 6 month grace period), over 3 years on the 2nd student loan, over 2 years on the 3rd student loan and over a year on the 4th student loan. This would equal out to more than $2,000 in interest payments that you will not have to pay. That is like getting an extra $2,000 free to help pay for your schooling.
In addition to your EFC score, eligibility requirements for the Federal Perkins Student Loan are as follows. You must:
• Be a United States citizen or an eligible non-citizen with a valid social security number
• Demonstrate exceptional financial aid need
• Be working toward a degree or certificate in an eligible program
• Have a high school diploma, GED or pass an approved ability to benefit (ABT) test
• Register with the Selective Service if you are a male between 18 and 25
• Maintain satisfactory academic grades
If you were offered a Perkins Student Loan, you certainly would be wise to take the full amount you have been approved for. With a low interest rate of 5%, a Stafford Student Loan, private Student loan or any other college student loan product will not compete. Since a Perkins Student Loan will most likely not satisfy all of your student aid needs, you can also apply for other federal college student loan products, like a Subsidized Stafford College Student Loan, or Unsubsidized Stafford College Student Loan. If you are still coming up short and have exhausted your federal financial aid resources, you should turn to a private or alternative student loan source.
